David Peri asked 3 years ago On a daily green or red bar when you have very low volume and wide price spread or very high volume and very narrow price spread does either of those conditions factor in your analysis. Thanks, Dave
1 Answers
Owen Staff answered 3 years ago Hi Dave,Yes. Absolutely. We like to trade liquid products. Penny or two spreads, if at all possible. You'll even see Pat take a stock off the Key List from time to time citing a wide spread. Now, there are some stocks we will trade that just naturally have a wider spread; like GOOGL for example. But, overall, yes, we don't want to give away an additional edge by giving away very much on an entry.Does that answer your question?Owen
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Actually I was referring to the price and volume bars not the bid ask spread….ex: Volume bar much less than average with the corresponding daily high low price bar showing a very wide price range or huge volume but a very small high low price bar…do these mean anything in your analysis….
You bet. Tighter bars and tighter patterns are better than wide bars and wide loose patterns. The tighter the bars and the pattern, the better chance the trend continues and better chance the breakout will not fail. One thing that typically happens as the market begins to sell off is the bars get very wide and loose. Check out a chart of any major ETF back in mid-Fed and track with it through March 23. Notice how when there is indecision and panic in the market the bars widen considerably.
Brief video for you:
https://youtu.be/m7AAW3T0NOo